DSM-Firmenich sells animal feed division to CVC

The agreement represents a value of €2,2 billion, but DSM-Firmenich will initially receive only €0,6 billion in cash. The remainder of the acquisition price consists of a deferred payment upon subsequent success (earn-out) and loans. The company will also initially retain a 20% stake.

The stock market initially reacted with disappointment to the agreement, primarily because so few direct payments are involved. The fact that the individual companies being divested were paid more in the past than the total amount they are being sold for doesn't seem to matter.

Animal Nutrition and Health encompasses a range of businesses in the vitamin business, premixes, advisory services, mycotoxin control and the like.

CVC Capital Partners plans to split the business into two separate companies, both headquartered in Kaisersaugst, Switzerland. These will be a yet-to-be-named "Solutions Business" and an "Essential Products Business." Both will operate independently under CVC's oversight. Solutions Company will continue to innovate and drive efficiency in livestock farming. The Essential Products Company will be built as a global leader in essential feed, food and fragrance ingredients,” said CVC Managing Partner Steven Buyse.

With the transaction, DSM will largely exit the food and feed business, but methane inhibitor Bovaer and fish oil substitute Veramaris will remain. The cheese business (formerly CSK) will also remain with DSM-Firmenich.